Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $796,800 is estimated to result in $265,600 In annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $116,200. The press also requires an initial investment in spare parts inventory of $33,200, along with an additional $4,980 in inventory for each succeeding year of the project. If the shop's tax rate is 22 percent and its discount rate is 10 percent, what is the NPV for this project? Multiple Choice O $47,096.29 $49,276.59 $-45,702.80 O $49,451.10 $44,741.48
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $796,800 is estimated to result in $265,600 In annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $116,200. The press also requires an initial investment in spare parts inventory of $33,200, along with an additional $4,980 in inventory for each succeeding year of the project. If the shop's tax rate is 22 percent and its discount rate is 10 percent, what is the NPV for this project? Multiple Choice O $47,096.29 $49,276.59 $-45,702.80 O $49,451.10 $44,741.48
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Masters Machine Shop is considering a four-year project to improve its production
efficiency. Buying a new machine press for $796,800 is estimated to result in $265,600
In annual pretax cost savings. The press falls in the MACRS five-year class
(MACRS Table), and it will have a salvage value at the end of the project of $116,200. The
press also requires an initial investment in spare parts inventory of $33,200, along with
an additional $4,980 in inventory for each succeeding year of the project.
If the shop's tax rate is 22 percent and its discount rate is 10 percent, what is the NPV for
this project?
Multiple Choice
$47,096.29
$49,276.59
$-45,702.80
$49,451.10
$44,741.48
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